JAPANESE INVESTING VAST SUMS IN U.S. GOVERNMENT SECURITIES

An enormous tide of money, rivaling the "petrodollars" from OPEC's profits amassed in the oil crisis years, is rolling through the world economy at a rate of $50 billion to $100 billion a year.

The new money comes from Japan, and about half of it is landing in the United States, according to Japanese government authorities here.

It represents Japan's growing surplus in foreign trade, and a lot of the money is being invested in the Treasury securities issued to finance the Reagan administration's huge budget deficits.

"It's potentially the biggest single flow of capital in world history," said Brian Fernandez, chief investment officer of the New York branch of Nomura Securities, the Japanese investment firm.

"I see no diminution of this at all," said John F. Loughran, head of the Morgan Guaranty Trust Co.'s operations in Tokyo.

"My guess," said Nicholas A. Rey, a managing director of Merrill Lynch, Pierce, Fenner & Smith Inc., "is we will have it for some time."

The funds represent the nest eggs of frugal Japanese consumers, who save more than 20 percent of their wages, and the profits of Japanese industry's conquest of world markets with automobiles, video recorders, cameras, and computers.

Japanese people turn much of their savings over to insurance companies, which try to outbid one another in offering consumers the highest possible return. The insurance companies, like Japanese corporations and pension trust funds, find the highest yields right now in the United States.

Domestic savings have been leaving Japan in an ever-accelerating rush, following sweeping deregulation of Japan's banking rules and the increasing financial sophistication of Japanese investors. In the first three months of 1984, the net outflow of Japanese capital -- the excess over the much smaller amounts that Japan imported -- totaled just $5.8 billion, according to the Japan Economic Institute, a Japanese government information agency in Washington.

By December, however, the monthly outflow had soared to $8.4 billion, an annual rate of more than $100 billion. For the whole year of 1984 the figure was $49.8 billion -- $10 billion more than the total of the three preceding years.

In addition, the Japanese recorded $4.7 billion in net short-term investments, mostly three-month and six-month U.S. Treasury bills. In 1983, Japan recorded a net inflow of $23 million of short-term funds.

To many economists, the monetary flood arises from the unusual condition of a world economy that is driven by the unique characteristics of the American economy -- its exceptionally strong dollar, its federal budget deficits, its relatively high interest rates, and its record trade deficits.

Japan has been the principal beneficiary of these developments. It is becoming the world's biggest creditor, while the United States, once the biggest creditor, is becoming the biggest borrower.

C. Fred Bergsten, director of the Institute for International Economics, a research organization in Washington, predicts that, at the current rate of Japanese investment abroad and American government borrowing, the United States will owe the rest of the world $1 trillion five years from now and that the rest of the world will owe Japan $500 billion.

"That's a stunning relationship," Bergsten said. "I think of it like a family -- we the husband who spends too much and they the wife who saves." Until recently, the United States was a major world creditor. At its peak in 1982, he said, foreign borrowers owed American investors $150 billion to $250 billion.

"What you have to worry about is the sustainability of it all," Bergsten said. Sharp declines of either the dollar's value or American interest rates could send the Japanese fleeing elsewhere for greater returns and cause further dollar declines and a recession.

"If U.S. interest rates drop to 5 percent," said Loughran in Tokyo, "all that money will come back."

Economists also suggest a quite different possibility, however. To make investments in the United States, the Japanese have to sell yen and buy dollars. Their demand for dollars helps maintain the high value of this country's currency.

In helping to keep the dollar up and the yen down, the Japanese help protect the price advantage of the goods their industries export to the United States, to the continued disadvantage of American manufacturers that compete with the Japanese both in the United States and in the world export market. As a result, Japan's surplus in trade with the United States -- $44.4 billion last year -- would persist and continue to provide new funds for the Japanese to invest in this country.

The volume of the flood has stunned Western banks and iwnvestment firms that have expanded in Tokyo and Osaka in quest of hundreds of millions of dollars in fees and commissions they receive for moving the money out of Japan -- or for moving it back if the appeal of overseas investment should change.

"It's causing a certain amount of panting in international financial circles," said a spokesman for Morgan Guaranty. Merrill Lynch, the largest American brokerage firm, reports that it has been adding personnel year after year in Japan until it now has 160 employees in Tokyo and 35 in Osaka.

The surge in foreign investment by the Japanese comes as a bit of a surprise to the Re prevailing in the world market.